timing to go short, most here got it so wrong!, page-27

with a general negative macro outlook for the australian economy, i feel the banks have had a massive run due to the yield story and the strong AUD.

reality will eventually catch up, as weaker economy will translate to lower profits = lower div payouts; combine this with a weakening AUD, then the appeal to own banks with negative earnings growth, falling dividends exchanged for a weaker currency, should eventually reflect in lower share prices.

as for CBA, with a market cap of $110 billion with it's main business covering a population of 22M ozzies, i feel it could be well stretched up here. i've shorted the stock 3 times over the past 6 months, however kept tight stops and took 2 small losses and a winner.

i don't believe the stock will hold its Div, with consensus price targets from the big investment houses (and geeze they got it wrong on sooooo many instances) closer to 5500, about $10 lower!!!

i've pulled the trigger on the following:

sell Feb 6201 call
buy Feb 6251 call
35.5c credit (you can get about 30c today)

with the stock expected to pay 140 to 150 dividend on the 18th Feb, and option's expiry on the 21st, CBA has 4 trading days to sell down after the dividend.

from current levels, assuming a 140 dividend, the stock should fall back towards 6285...i only need an additional 50c downside to break even and 85c down to 6200 to make full profits...anything below 6200 is full profit, while max risk is 15c.

so on 300 lots, i have received $10,500, with a max risk of $4500 and that's if CBA closes above at or above 6251 on the 21st.

if you pull the trigger today, same principle applies, however risk is 20c ($6000 on 300 lots) and credit is 30c ($9000 on 300 lots).

just saying...